Mahir Hussain.

17-Arid-5248.
BBA 6th FINANCE.

Assignment # 02.
FINANCIAL STATEMENT ANALYSIS.

Submitted to:-
Maam Anum Shafique.

SUMMARY ( Video ).

LECTURE # 01.

Objective:-
As the subject is FINANCIAL STATEMENT ANALYSIS so the main objective of the subject is not
only to record the data but analysing the data and interpret and drive some results from the
observed data of financial statements at the end of the accounting period.
When we derived some proper sufficient and reliable result from the Financial Statement then
we can make proper Business decisions for investment in an industry or company.
Overview:
Course has been divided into segments.
Accounting principles And Accounting Cycle.
Preparation of Financial Statements.
Notes to Financial Statements, Audit Report and then Annual Report.
Quality Of Financial Reports.

Types Of Business:
Sole proprietorship.
Partnership.
Corporate Business.

First Segment:
Accounting :-
Accounting is the basic unit for each and every kind of business. Each business is concerned
with Accounting so that Individual and organisational level require accounts and accounting.
For the routine revenue and expense generated require accounts.
So Accounting shows the results of Business operation for an Accounting period.
Financial Reporting:-
Financial Reporting is a report which provides prudent information, reliable and appropriate
information to the Decision Maker for making proper decisions regarding Investment.

Financial Statements:-
Income statement:- Also called Profit loss statement. It is for the accounting period..
Owner’s Equity Statement:- Business Equity it will increase and decrease with the profit and
loss in business respectively from the correspondence Amount.
Balance sheet:- Balance Sheet shows the Business Financial position at the specific date of
accounting period and that particular period is at the END of the Accounting period.
Statement of Cash Flows:- It shows cash inflow and cash out flow.
Notes of The Financial Statement:- Notes are the integral part of the financial statement.

Accounting Period :-
Accounting period can be daily weekly quarterly semi annually and calendar year.
Pakistan Accounting Period starts from 1st July and ends on 30th June.
Financial Statements are the end product of the business.
Now the Accounting Principles.
GAAP ( Generally Accepted Accounting Principles):
1) Entity Principle: Owner Account is Different from the Business Accounts.
2) Cost Principle: Value and recording of Assets at cost.
3) Going Concern Assumption: Direct Relation with Cost Principle
4) Objectivity Principles: Revenues And Expenses should have an Objective.
5) Stable Currency Principles:
6) Adequate Disclosure Concept:

Accounting Equation:
Assets = Owner’s Equity +Liabilities.

Accounting Equation is the basis for the Balance Sheet.

Right side of the equation provides the resources and the left side is the utilization of that
resources.
Assets , Liabilities and Owner’s Equity are the three main components/elements of the balance
sheet and also the subcomponent. It means that Each Financial Transaction affects two or more
elements or sub elements of the accounting equation.